I want to buy a car and home...which 1st? or does it matter?

[Anonymous]

Iam in need of a new car (not brand new) Ideally, Iam willing to spend apprx $15k/36mths for a car...I want to buy a home b4, the market changes and cost of home increases.  Will purchasing a car impact my credit greatly, if I wanted to purchase a home? What type of time frame (after buying a car) does lenders rather see, a car loan on your credit report while, trying to obtain a home loan? Which 1 should I do 1st, or does it matter? help, thks.

[Watchmann]

A home should always be the first choice between the two.  It is a much bigger purchase and you want the highest credit score possible in order to get the best mortgage rates.  Focus on getting the house first, then you can worry about  a car.

This is especially true now with home lenders very, very suspicious of borrower's debt load.  You want to go in with a squeaky clean CR and a low debt ratio.

Message Edited by Watchmann on 07-20-2008 12:30 PM

[Anonymous]

In general, home values are not likely to increase much in the next 2 years. The housing market has not seen a bust this big since the 80s and that bust took about 5 years to recover from.

I would say in general it is correct to buy the home first, but if you don't have an installment loan on your report, an auto loan could increase your score if you buy the car then wait 6-12 months to buy the house.

If you have an installment loan already a new loan will not boost your score and I recommend you get the house first.

[Anonymous]

Good point...to repsond to your advice of an auto installement, I do have 1 on my report from an a Honda civic, apprx 10 yrs ago which reads...paid in full/never late from Bank Of America.  A house is definitely more important but Iam considering financing another car at this time bcuz, I dont want to wait 4 my current car to die and then, Iam in a volunerable position to get another car.

If it wasnt 4 dat reason...I wouldnt consider financing another car in this economy...(I dont like car notes) but you both gave me something to think about bcuz, a new installement might boost my score and with the current housing market, it probably will take quite sometime b 4 the market bounce back...thks, 4 the advice.    

[Anonymous]

Yes installment loans that are OPEN give you mix points, sometimes up to 20, which makes up for their impact on your average age and installment utility. Since the loan on your report is closed you are not getting mix points from it, just history points. Thus, a new loan would increase your credit mix. If you need a car I recommend you get one, and if you can wait a year on the house I recommend that too, from a FICO perspective. If you can wait 6 months you should be fine as long as all your other factors are in line for a mortgage.

[Watchmann]

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debtisgood wrote:

Yes installment loans that are OPEN give you mix points, sometimes up to 20, which makes up for their impact on your average age and installment utility. Since the loan on your report is closed you are not getting mix points from it, just history points. Thus, a new loan would increase your credit mix. If you need a car I recommend you get one, and if you can wait a year on the house I recommend that too, from a FICO perspective. If you can wait 6 months you should be fine as long as all your other factors are in line for a mortgage.

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This is all correct in that your FICO score may be improved with a car loan on it.  But lenders going forward are looking at far more than just FICO scores as they have gotten burned.  They will be scrutinizing your ability to pay the mortgage loan, so if they see a $400-$500 car note in your liabilities that will be duly noted.  All things being equal I think it is becoming more important to have money available to pay the loan, as well as a high FICO score.  FICO scores have been misused by the banking industry.  That will be changing. 

[Anonymous]

Wow...with dat being said...I have so much to consider.  I just checked my fico scores and its EX645, TU 602, EQ 602.  Iam very disappted bcuz, I thought it was higher however, with the simulator and other factors to consider I know, what my options are if I want to improve on that. 

If, I can hold on to my hoop-tee, believe me...I will!  Tks, for the info...I can see FICO forum being, my new addiction!